NEW YORK THE SUN - LAWRENCE KUDLOW - FEB 22, 2023
If the president opened the fossil fuel spigots, the price of oil would drop worldwide. That could crimp Putin, who has a history of catching war fever when oil prices are peaking.
With all the hoopla surrounding President Biden’s trip to Poland and his surprise visit to Kyiv to meet with President Zelensky, plus more bravado from Vladimir Putin — including dropping out of the New Start nuclear treaty with the U.S. — and of course the Chinese foreign minister insulting Secretary Blinken and then sucking up to Mr. Putin, one issue that no one seems to be talking about for the moment is oil.
So, let’s talk about oil.
Mr. Biden hates oil. Mr. Putin loves oil. Xi Jinping loves Mr. Putin’s oil.
Remember all the sanctions from the U.S., the EU, and NATO? Sanctioning the Russian central bank, sanctioning the Russian oil producers, bank lenders, and insurance companies around the world? Remember all that?
Well, guess what? Russia today is still selling roughly 10 million barrels of oil a day — basically what it was selling a year ago. How is this possible, you might ask.
Well, it’s a good question. It may be unanswerable.
Sanctions really haven’t worked, but, for sure, China and India have been buying up any Russian oil production slack created by reduced European demand. That’s our great friend India, remember?
I don’t know what the U.S. numbers are. I sincerely hope they’re way down, but here’s a thought: With Russia still selling 10 million barrels a day and the basic ballpark oil price being $80 per barrel, that makes $800 million a day from oil sales. With 365 days in a year, that comes to $292 billion. For the year.
That’s enough to fight a war, even if your army is terrible. Even if you’re bungling the war left and right, you still have $292 billion. Much of which, by the way, is probably skimmed off the top and stolen by Mr. Putin and his cronies.
Now, consider this: For the three years pre-Covid under President Trump, the average price of oil was about $60 a barrel. If that were the selling price for Mr. Putin’s 10 million barrels a day, it comes to $600 million, or $219 billion for the year.
So now we complete the exercise: At today’s $80, at which Mr. Putin gets $292 billion, versus the $60 price several years ago, at which Mr. Putin would be getting $219 billion, Mr. Putin has made a tidy profit of $73 billion for the year.
In fact, the oil price rose to well over $100 a barrel at the time of Mr. Putin’s invasion of Ukraine, which greased his pockets and his war machine ever more, but let’s stay with the current quotes.
That $73 billion profit means Mr. Putin is playing with house money, but it’s our U.S. house. Mr. Putin just stood there and watched it happen and of course fought a war and of course probably stole a good chunk, also.
Now, consider Mr. Biden, who hates oil. If he weren’t waging war against oil, petroleum products, and fossil fuels, we might be producing 14 million or 15 million barrels a day right now, instead of roughly 12 million barrels.
The 14 million or 15 million barrels a day were the estimates from the U.S. Department of Energy a couple years ago. Right before Covid, we were over 13 million.
Purely as a guess, I’m going to suggest that, with 14 million or 15 million barrels a day being produced by the U.S., the world oil price would probably come in someplace close to $50. Just a guess, but I don’t think it would be $80, and I think it’s a pretty good guess it wouldn’t be $100.
So, Mr. Biden’s Green New Deal radical climate obsession, and the global petroleum politics that go with it, has really paid off for — wait for it, hang on a second — Vladimir Putin, and his war against Ukrainian freedom.
Could Mr. Putin fight a war at $50 a barrel? Maybe, but that’s not his history. His history is that when oil hit $130 a barrel in July 2008, Mr. Putin filched a big chunk of Georgia. When oil crossed $100 a barrel in February 2014, Mr. Putin picked off Crimea. Roughly a year ago, with oil above $100 a barrel, he invaded Ukraine.
Moral of the story? Mr. Putin likes high oil prices. Second moral of the story? Let’s ask why the Biden administration is helping him with high oil prices.
Third moral of the story? Reopen the fossil fuel spigots here in the U.S. It could save Ukraine, and it would sure be America First.